My question is (c). Basically, AS curve becoming steeper can be reflected by the value of v bar increases, showing that inflation is more sensitive to SR AD shock. However, this is no impact on AS shock theoretically, as AS shock relates to the change of o bar.So I guess maybe the provided solution is wrong, could u please check it for me?Thanks a lot! ***QUESTION - 2 -The slope of the AS curve:(a) Why does the AS curve slope upward?(b) If the AS curve were more steeply sloped, how would the economy respond differently toaggregate demand shocks (shocks to ā)?(c) If the curve were more steeply sloped, how would the economy respond differently to ag-gregate supply shocks (shocks to O )?ō ↑1ü↑(d) What kind of economic changes in the economy would lead the curve to be more steeplysloped?AD: Y = -√(x+-F)_•_π²+ = π+₁₁+ √Ỹ+ + ¯¯AS: (c) A steeper AS would mean that both output and inflation would fluctuate less for agiven oil price shock. (Note that the oil price shock is a y-intercept shock.)

Aggregate demand refers to the total demand for commodities and services made by all the economic…

Answered: My question is (c). Basically, AS curve…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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My question is (c). Basically, AS curve becoming steeper can be reflected by the value of v bar increases, showing that inflation is more sensitive to SR AD shock. However, this is no impact on AS shock theoretically, as AS shock relates to the change of o bar. So I guess maybe the provided solution is wrong, could u please check it for me? Thanks a lot!

(c) A steeper AS would mean that both output and inflation would fluctuate less for a
given oil price shock. (Note that the oil price shock is a y-intercept shock.)

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